5 Proactive Tips To Prevent Accounting Risks for Accounting Firms and Businesses

The current accounting scenario is a lot more advanced  compared to what it was a few years ago. The reason being accounting firms do more than just number crunching. Proactive Accountants help their customers draft policies, make business predictions, formulate a budget plan for better financial management, and deal with more client information than any other industry. The accounting industry, therefore, needs to house greater agility when it comes to implementing security measurest to prevent accounting risks.

The chances of a data breach multiply with the amount of data an industry deals with and accounting firms are increasing at an alarming rate. The best thing they can and should do is to invest their resources into risk mitigation rather than making amends later.

Here are 5 proactive Tips to prevent accounting risks for accounting firms:

1. Securing Electronic Information And Communication

Accounting firms or any other business today cannot function smoothly without the assistance of the internet and other modes of communication. Since accounting firms deal with huge amount of client information, securing these modes of contact is on the top of their priority list to prevent accounting risks and business risks.

Here are 3 things an accounting firm must do to cushion electronic information and communication and stay away from cyber liability:

I. Build A Security Strategy For Your Firm

An accounting firm must be fully aware of the contents of the data they import and export. A network firewall helps filter data and protects the company from intruders, viruses, and malware. Whether your data is stored in the cloud or it is saved on your office computers, a network firewall is mandatory. Apart from a secure firewall, firms must also implement data encryption and multi-factor authentication for additional security.

II. Physical Security Is Equally Important

Physical security is just as important as electronic security. Hacking and theft can also be done at the physical level. For office-level security, firms must install security cameras and appoint security guards for 24*7 data monitoring.

III. Bolster Your Communication Policy

As an owner of an accounting firm, you must adequately communicate your security protocol to your employees. Your staff must be vigilant enough and quick to respond in case of a breach.

2. Protect Your Firm From Errors And Ensure Accuracy

When data is handled manually, the probability of errors and omissions is significantly high. Human errors are fairly common, as people often phase out or miss out on a piece of information while performing mundane tasks such as entering data in the accounting software. But that does not give them the scope to go ahead with these mistakes. In fact, errors and omissions may often prove to be costly for an accounting firms and Businesses.

Listed below are ways that can help firms to prevent accounting risks and steer clear of this professional liability:

I. Do Not Overburden Your Employees

The best way to avoid costly errors is to reduce the burden on your employees, especially during tax season. Of course, the work pressure swells during the tax season, and it may be tough to ease the strain when work piles up, but over-stressed employees are more likely to commit calculation errors. A simple, cost-effective, and sure-shot way to reduce errors is to use an advanced accounting solution, such as QuickBooks.

II. Work Out A Healthy Relationship With Your Clients

Your clients are your bread and butter and keeping them happy should be a firm’s top priority. Even the slightest of errors can tip them off and you might end up losing a valuable client. Healthy communication, round-the-clock availability, and building a long-lasting relationship with your clients will help you in the long run.

3. Hone The Communication Skills Of Your Employees

Improper communication has its own outcomes. Respectful communication and delivering your message to-the-point can prevent accounting risks as well a number of situations from going out of hand.

Here are some of the ways to confirm that your employees ace at communication:

I. Lay Out Your Expectations Clearly

When conversing with a new client, ensure your employees follow the described protocol. Take time to understand what they expect from you and also remember to communicate your expectations profoundly. Any miscommunication can lead to dire circumstances later.

II. Communicate Professionally

Every business has its good days and bad. Your employees must be quick-witted and must try to understand the mood of their clients. If they are about to lash-out or sound unhappy, your employees must respond in a calm and composed manner. Same applies to written communication, as emails must be sent responsibly. At the end of the day, the client must be seen as a top priority and employees should work to keep them happy.

III. Let Your Clients Know They Are Priority

Nothing can be worse for your business than ignoring your customers. They lie at the top of your priority list and care must be taken while taking their calls and replying to their emails. Even if a client calls frequently, your goal must be to be available as soon as possible.

IV. Do Not Keep Facts Hidden

So what if you missed a deadline? Tax seasons are often hectic and missing a deadline is a common possibility. But if you do, be convinced that your client is aware. Do not wait for them to find out on their own. Trust building needs truth at all times and is imperative for a long-lasting relationship.

Also Read: From Bookkeeping to Strategic Advisory: A Growth Switch for Accounting Professionals

4. A Healthy Work Environment For Greater Productivity

Accounting can often be stressful. Owners of accounting firms must pay proper attention to their employees’ physical and mental health. A happy and healthy workplace is a must for a work environment that promotes productivity and increases employees’ efficiency.

Here’s what can be done:

I. Teach Stress-Management And Promote Work-Life Balance

Since accountants are handling a third party’s money, stress is inevitable. The stakes are high, the pressure is real, and the job can often be demanding. Employees must necessarily keep calm in order to avoid expensive mistakes that may affect the company as well as the employee themselves.

Firms must formulate policies that encourage work-life balance, delegate responsibilities to their employees according to their capabilities, and use healthy modes of communication so that employees feel supported. There should be scope for social engagement.

II. Give Importance To  Employees’ Health

Employees who fall sick frequently eventually become a liability for their companies. Business owners can take a few steps at their end to ensure their employees are in good health. A hygienic environment is as important as personal cleanliness. Comfortable seating arrangement, clean drinking water, proper sanitation, and scope for physical activity is a must to assure good health to the employees.

5. Protect Your Property

A business needs all-around protection for a smooth run. But, most accounting and tax preparation firms are concerned with the abovementioned risks. They often forget that risk to personal property is equally important and adequate arrangements should be made to mitigate it. Although not all accidents can be predicted, some prerequisites can help avoid them. Here is how you can mititgate such risks and keep your accounting firms and businesses foolproof.

I. Do Not Leave Your Valuables Unattended

Your office computers and laptops are home to a colossal amount of data. Leaving the valuables unattended and out-in-the-open is like food for bait. Restrict access to untrustworthy people in the office. When on a trip or visiting a client, be positive that you and your employees keep the gadgets guarded.

II. Keep Electrical and Fire Hazards in Check

Most office fires are a result of inadequate wiring or short-circuiting due to overloading. Employee safety is at risk if wiring and other electrical fittings are not properly installed. A regular visit from an electrician is mandated to make certain that your workspace is free from electrical and fire hazards.

A Final Word

Businesses and risks go hand-in-hand, but being proactive can help protect your firm from all kinds of uncertainties. Having the right policies and providing your team of employees with adequate training can help your accounting firms and business to prevent accounting risks and tackle any sort of situation.